Information Wants To Cost Money

In August of 2015 there was a flap over Spotify’s new extension of its privacy policy which gave the company broad access to basically everything on a user’s phone. Such effrontery was treated with surprise and outrage by the digerati, from Wired Magazine to Markus Persson, founder of Minecraft. Since then we’ve been treated to dozens of similar stories every few months about data breeches, overreaching privacy policies, and reckless data sharing.
We shouldn’t have been surprised. All companies would love access to your contacts and your photos. All companies want more information about you. And all companies would like to send you more content and product information if they could. Information is the fuel that runs the modern economy. The data breeches and nefarious use of data occurs not only because of bad actors but because of bad system design that fails to consider that:
Information isn’t scarce.
Its marginal cost is effectively zero.
The consumer internet is run on a model of free content and ad-supported business plans.
The companies that enable you to access this free content are network oligopolies.
As long as the majority of content is free, we are trapped in an infinite loop in which the business plan that makes the most sense for venture capitalists and entrepreneurs is one based on metastasized network effects, i.e., gathering the largest possible audience quickly. Gathering that large audience depends on making ever more content free (even if it is someone else’s copyrighted content) and exploiting personal information in ever more clever ways. This long ago created a vicious circle in which grabbing huge audiences quickly by providing free content leads audiences to expect that most content and services are free, and leads inexorably to more ad-supported business plans. That cyberthieves can steal your personal information, trollish and antisocial behavior is common, and actors around the globe can spread propaganda quickly to influence markets and elections, are just byproducts of this system. This stuff is so obvious, and has been commented on by so many people, that I only hope I can make a couple of provocative suggestions to escape our current mess.
What’s Wrong With An Ad-Supported Business Model?
From an ethical and esthetic standpoint there’s always been something to criticize about ad-supported or middleman business models. But, on the positive side, advertising drives growth, and historically, it has worked relatively well for ad-supported media in analog space. Historically in print media it was an integral part of the content package. However, there is something wrong with an ad-based internet that wants content to be free. And it has had some terrible consequences:
- Creators don’t get paid enough for their work. Chefs can get paid for their work. Interior designers can get paid for their work. But in fields where the work is fully digitized, the lack of scarcity in information leads to higher output and lower average quality, with lower incomes for many creatives. Medium.com itself is a place where otherwise intelligent people write for free in hopes of getting paid in some other way (fame, notoriety, consulting, charity).
- This dilution of quality and increase in bad behavior is a feature of the system, not a bug. In a zero-cost ad-supported digital world incentives run to clicks and impressions. Notoriety and anger generates more impulsive viewing than quality or compassion. So that is what we get. Careers are launched on the back of sex tapes, and performance artists convince people that the parents at the Sandy Hook school faked their children’s deaths. Before I wrote this paragraph I was on a site advertising the death of a celebrity who is actually very much alive. If one clicked on the “news story” you got pitched on…you guessed it, male enhancement pills.
- Aggregators run the global digital economy. The middlemen — Uber, eBay, Google, YouTube, Facebook, Amazon and all the rest — erase friction and enable new market opportunities. They undermine local business and amass so much power they terrify manufacturers and other creators, whose business model becomes dependent on them. The mere rumor that they are interested in entering a new field like banking or health care sends the stock prices of incumbents in those fields tumbling.
- Laws aren’t enforced. YouTube intentionally built its billion-dollar company on the backs of content to which it had no rights. Uber and Airbnb did the same by ignoring laws regarding taxes, car services, hotel inspections and minimum wage. People whose personal information is stolen online have next to no recourse. And, there are few protections for customers dealing with legitimate businesses, either.
Sometimes I’m asked a question like this. “Really, what’s really wrong with this model? Or, disturbingly, “Don’t you understand that is how the internet works?” As if God decreed that all content should be free, and Tim Berners-Lee wanted a web overrun by spam, clickbait headlines, annoying slide shows, faux-celebrity Twitter posts, Stasi-like spying, and phony middleman web sites.
Actually, I’m being too kind. This model has turned much of the internet to a steaming pile of information waste. Zero marginal cost and lack of transparency are key drivers of many of the things that plague the online experience: viruses; malware; spam and unwanted email; fake, disingenuous, subpar content designed in content farms; sophomoric or dangerously antisocial chat rooms and forums; vicious internet shaming; various kinds of hitchhiking free riders; and all manner of scams.
It’s a supreme irony that Google’s search offering, which makes its money by interposing itself and ads between you and the content you wish to find, is itself beset by middlemen. When you’re searching for crucial information, such as how to figure out why your computer died while working on important documents, or how to deal with a new diagnosis of cancer in your family, Google spams your search results with phony middlemen sites that purport to offer information that will be useful to you but in reality are just click farms with dubious, illegally copied information, frequently delivered in mangled English by a programmer in Macedonia. The result is that in terms of effectiveness search engines are worse today than they were a ten or fifteen years ago.
An electronic culture that is insecure and unsafe, that offers no privacy, that is filled with pickpockets and con men, that is built on the theft of copyright, and at the same time is polluted by information that is intentionally dishonest, wrong, or incorrect — that doesn’t really sound like a great world in which to live. I can walk downtown from my house in ten minutes and along the way no one will threaten or attack me. But in ten minutes surfing the web I will be accosted and by software or individuals — some of whom are out to cause real harm — 100 times, even if it is all happening in software that I don’t notice.
We all know the internet is the most important media innovation since printing. We all know the incredible value it produces in our personal and work lives. And, we all know it is deeply flawed. What I don’t understand is why, 29 years after the invention of HTTP, we still put up with it? And, neither does Tim Berners-Lee, which is why he too is working on plans for a next-gen internet that solves some of the issues.
Fixing this will take re-engineering the internet at some level, so that security and privacy are as highly valued as anonymity. But it also requires us to impose artificial scarcity. We need to defeat zero marginal cost. And, that can be accomplished with a set of changes. First, instead of having a “free” internet, we need one in which every action we take is paid for directly by end users. Every story read, every image viewed, every form filled out, every video downloaded, every tweet, every post, every comment, every keystroke, every image uploaded — every action should cost something, even if it is only a tiny fraction of a cent.
Second, we need for the money to stop going to the wrong people. My own bias is for a system similar to the rights systems that have been managed by ASCAP, BMI and other rights organizations around the globe for a century. Every time one consumes content, a creator should get paid.
Third, any community worth its salt needs cops. I love open source and self-running systems but it’s time to get real. We need a world in which nasty online behavior has consequences. In the internet world a lot of the money is made when you click on a headline. If the content is irrelevant and you bounce off the site after a third of a second, the content provider still makes money off the advertiser. Even if the site you landed on loads your machine with an unneeded app or with malware that takes you four hours to remove, they’ve made money. There’s no repercussions for this behavior, but there needs to be.
Finally, we need for users to own information. What could be more responsible than that? If Mercedes, Sephora, and Facebook want to use your info you can let them do it in exchange for trade value, or, better yet, you should be paid directly, just as advertisers pay Google for your clicks today.
What would be the impact of this kind of internet? For spam mailers it would be disastrous. Why send out a million pieces of email if you’re going to be charged $10,000 to do so? Similarly link farms and others that exist only to lure wayward travelers would suffer. But for ordinary people it might make life a lot more sensible. Suddenly our actions — what we consume and create online — would have consequences in the form of costs, no matter how tiny.
Owning your data and paying for copyrighted information is hardly a new idea. At the dawn of people thinking about computers and networks Ted Nelson, inventor of the hypertext concept, envisioned a world in which everyone would own their information. If you posted a photo, anyone could copy it. But your ownership rights would travel with that photo and if money resulted from that copying, you’d be compensated. Anyone could use any information, and improve on it if they wished. Imagine such a system in use today. We’d flip the internet on its head.
Let’s do it.
